Annuities & Pensions

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 Means a regular periodic payment. Annuities start where life insurance Ends Insurance Cos pay pension annuities to

individuals(Annuitants)
Certificate of Survival for payment of

Annuities

ANNUITIES are of two broad types

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ANNUITIES

IMMEDIATE ANNUITY

DEFERRED ANNUITY Annuity commence at specific time/ age of the Annuitant. Deferred annuity payments starts after the lapse of a selected period 5/2/12 called Deferment

Annuity begins at once

Purchased with a single premium called purchase price.

Done when nears retirement/lump

Annuity payout Options :1.

Life Annuity : provides annuity until the annuitant dies. This provides the highest annuity payment but risk is high as the payment will stop once he is dead. Life with Certain Period : provides income until the annuitant dies and if he dies before the designated certain period the insurer will pay the balance to the contingent beneficiary for a certain period. Annuity is low when considered Life Annuity. Joint Life and Last survivor: provides income to two or more individuals until all individuals die. The annuity payment is the least. Based on the nature of the Annuity amount, they
are :
1. 2.

1.

1.

Fixed Annuity 5/2/12 Variable Annuity investment choices invested in portfolios of securities.

1.

Public Pensions 1. Social Security Schemes run by GOVT of resp. countries 2. These are Publicly managed with mandatory membership and typically funded on Pay As You Go basis currently working class contribute for retired.

2. Occupational Pension Schemes1. Set up by employer themselves, independently funded schemes alternatively have an arrangement with Life Insurance Cos. 2. Life Insurance Cos manage the fund and discharge the obligation on the employers behalf.
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3. Personal Pensions

Pension Plans Broadly made of

Defined Benefit Plan

Defined Contribution Plan

Defined Benefit Plan: - this plan assures the contributors a predefined pension payment irrespective of their contribution to the scheme or its investment earnings. -> benefit is calculated on the basis of LENGTH of SERVICE & FINAL SALARY EARNINGS. This calculation is termed as ACCRUAL RATE. -> ACCRUAL RATE represents the fraction of pensionable Salary earned per year 5/2/12 of service by the scheme member.

Defined Contribution Plan:- This plan specifies the contribution to be made by the employer or sponsor, and the pension income depends on the amount of contribution, the number of years of contribution and fund performance. Pension Schemes for Government of India Employees: 1.Defined benefit pension plan 2.Lump sum Gratuity 3.General Provident Fund Pension Schemes for Organized Sector:1. EPF ( 12% by employees/ 8.33% Emp. Pens Scheme / 3.67% to EPF) 2.EPS 3.EDLIS 4.Gratuity 5. Super Annuation
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